Silvia Hernandez, GSA Future of Work Now Leader at EY, highlights the value and impact of human capital as #WeEmerge from this crisis and begin to embrace the ‘new normal’.
The world changed in March 2020. Almost overnight, the COVID-19 pandemic strained healthcare systems to the breaking point, put much of the global economy on an indefinite hiatus, and radically reshaped societal norms and interactions. For businesses everywhere, these events have accelerated transformation by further undermining established assumptions and catalyzing new business models and approaches.
The organizations that will emerge from this global crisis transformed are those that align the long-term implications arising from their decisions and actions in the ‘next’ and ‘beyond’ dimensions.
Understanding and measuring people as the most relevant asset
The response to this crisis by governments and businesses across the world has fundamentally changed the way we live and work. The outcomes that matter most are often directly related to how effectively companies have been able to deploy its people, enable them to perform, foster a clear and common purpose, and how well leadership has been executing the company’s strategy.
CHROs and HR teams have made a vital contribution to business continuity, and now the expectations will shift towards creating organizational plans to move into an unknown future. Humans will remain the critical success factor for companies’ performance and value creation in this new reality. Organizations that effectively reflect this aspect in their decision-making process are favorably viewed by stakeholders — customers, employees, investors and society members alike.
By measuring how successfully a company is deploying and investing in its people, we can create a better basis for steering our organizations and decisions, and at the same time improve transparency for its stakeholders. The historical approach of disclosing only the costs of compensation and benefits often is not enough to fully understand the value and impact of human capital on the performance and future prospects of an organization.
In 2018, the Embankment Project for Inclusive Capitalism brought together over thirty leading global companies to identify ways to quantify aspects of human value. Collectively we identified a defined set of metrics clustered in three areas to create transparency around company’s long-term value:
- Human capital deployment (e.g. people development, workforce diversity, attraction, recruitment and turnover)
- Employee health (e.g. absenteeism, wellness programs)
- Organizational culture (e.g. alignment with purpose, leading by example).
The ability to measure human value enables companies to keep a finger on the pulse of their workforce deployment and performance, helping them to identify areas for improvement. This equips leaders to make the right decisions for their people and the business, helping to build trust, engagement and wellbeing. If adopted widely, such human value metrics could offer a consistent comparison between different companies across sectors and align stakeholders on long-term corporate value.
The structural and ethical decisions our governments and businesses are currently making make me feel optimistic that people will play the central role in the future of work and humanity. There is a great deal of uncertainty ahead and we can get through this together by taking human-centered approaches and understanding how our people are contributing to companies’ success. It will be our collective responsibility to ensure that the ‘new normal’ is an improved one, leading to a better working world.